What is Brand Equity?

Brand equity is a set of assets (and liabilities) linked to a brand that adds to (or subtracts from) the value provided by a product or service to a firms customers. Components of Brand Equity are : Awareness Perceived Quality Brand Associations Brand Loyalty Proprietary Brand Assets like trademarks , patents , channel relationships
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Brand Equity Theories

1. Young and Rubicam Brand Assets Valuator (Y& R BAV) 2. Brand Equity Ten by David Aaker 3. Interbrand 4. CBBE

Young and Rubicam Brand Assets Valuator

Differentiation (Point of difference , How is the brand different from the rest of the world, What does it offer which others are not offering) Relevance (Is it relevant to significant segment, does it attract a large customer base , house hold penetration) Esteem (Quality perception ) Knowledge (What brand stands for, awareness , recognition , recall)

Differentiation

Shoppers Stop :Experience

Inorbit Mall: Multi Anchor Stores

Ferrari : Sports Car

Pearsons :Low price edition

Aaj Tak , India TV : Masala News NDTV : Intellectual News Bose : Audio quality

Relevance

Medicine Brands (Band-Aid, Crocin , Glycodin , etc) Apparel Brands (Arrow , Peter England , etc)

Consumer Durable Brands (LG , Videocon , etc)

FMCG Brands (Brands of HLL, P&G , etc)

Food and Grocery (Kissan , Annapurna , etc)

Esteem and Knowledge

High esteem and Low knowledge( Luxury Brands, The Pioneer , The Statesman ,etc)
Low Esteem and High Knowledge (Masala News Channel , Mumbai Mirror , etc ) High Esteem and High Knowledge (Maruti , Santro , Financial Newspaper , etc)

Low Esteem and Low Knowledge :Local Brand

Brand Strength and Stature

Brand Strength=Differentiation*Relevance

Brand Stature =Esteem *Knowledge

Brand Equity

Brand Equity= Brand Strength +Brand Stature Assuming 100 consumers were interviewed on these 4 parameters to measure Brand equity of Lifebuoy Brand of Personal wash Soap 40 people said this Brand is same as other Germ fighting Brand and 60 said its different from other competing Brands (differentiation =0.6) 90 people said this Brand has high relevance (relevance=0.9) 80 people said they know what this Brand stands for (Knowledge=0.8) 90 people considered it a high quality Brand (Esteem=0.9) Brand Strength=0.6*0.9=.54 Brand Stature=0.8*0.9=.72 Brand Equity=1.26

The Brand Equity Ten (David Aaker)

1. Loyalty Measures 2. Perceived Quality / Leadership Measures
1. 2. 3. 4. 5. 6. 7. Price Premium Satisfaction Perceived Quality Leadership / Popularity Differentiation Brand Personality association Organizational Associations

3. Associations / Differentiation Measures 4. Awareness Measure 5. Market Behavior Measures

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Brand Awareness

9. Market Share 10. Market Price & Distribution Coverage

Price Premiums

How much more or less customers are willing to pay for X Brand in comparison with another brand of similar product category. This amount of money (+ or -)is called price premium associated . Price premiums are of two types -:positive and negative. Positive : Extra amount that a customer is willing to pay to avail a brand compare to another Brand Negative : How much less for a brand is available compare to another brand before one switches brand.

Satisfaction

Perceptual gap (Dissatisfied, satisfied, delighted) Repeat Customer Loyal Customer Advocacy The brand is the only , one of the brands, among the available brands that customer buys and uses

Perceived quality /Leadership

Quality perception Consistent high quality The best , one of the best , one of the worst ,the worst In comparison to other brands this brand is growing in popularity Leader / Challenger / follower/Niche Respected for Innovation

Association /Differentiation

Perceived value :The brand is good Value for money ,Reason to buy this brand over others. Personality: Interesting , Image , History , Culture Organization: Which organization is this brand attached (Trust , Proud , admire , pleased) Differentiation

Awareness

Recall ( What brands of Mobile can you recall) Recognition(Have you heard of Kar Lo Duniya Muthi Mein) Top of mind(the first named brand in recall list) Brand dominance (the only brand recalled) Graveyard statistics (recall level of those who recognized it) Brand salience ( you have an opinion about the brand)

Market Behaviour

Market Share Relative Market Price Percent of stores carrying the Brand Percent of people who have access to brands

Interbrands
Interbrand, a UK based consulting co. Criteria includes business prospects and brands market environment, as well as consumer perceptions Brands evaluated on 7 criteria:
Leadership (25%) Stability (15%) Market (10%)

International (25%)
Trend (10%) Support (10%) Protection (05%)
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Brand Strength: This is calculated on the basis of

seven weighted factors:

FACTOR Leadership Stability Market Geographic spread Trend Support Protection

WEIGHT 25% 15% 10% 25% 10% 10% 5%

IMPLICATION Is the brand a market leader in market share? Does the brand have stable market share? Is the market in which brand operates stable? Is the brand an international brand? What is the long-term future of the brand? Is the brand actively promoted and supported by the company? Is it adequately protected by trademarks?

Interbrands
A consultancy firm was given a task to derive brand equity of three competiting brands using Interbrands .The data collected for three brands is as follows:
Brand LS STB MKT INTL TREND SUPPO RT PROT

A B C

MLeader MC MFollower

STB STB USTB

VM VM VM

MNC MNC DM

EXcell EX EX

HighS MedS LowS

PROTN PROTN PROTN

Calculate Brand equity of all three brands

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CBBE
Consumer Based Brand Equity

The 4 Fundamental Questions

Who are you? (Brand Awareness) What do you do? (Brand Knowledge) What do I think about you? (Brand Attitude) What about you and me? (Brand Relationship)

Brand Attitude

Brand Judgments

Quality: Smirnoff Credibility: Apple Consideration: Sony Superiority: Intel

Brand Attitude

Brand Feelings

Warmth: Archies Fun: Disney Excitement: MTV Security: SBI Social Approval: Mercedes Self-Respect: RbK

Customer Based Brand Equity Pyramid

Brand Consumer Resonance Relationship- What about You and me

Consumer Judgement

Consumer Feeling

Response- What about You

Brand Performance

Brand Imagery

Meaning-What are You POP, POD

Brand Salience

Identity -Who are You

CBBE for Amazon

BRAND RELATION
BRAND ATTITUDE

Loyalty, Community, Loyalty, Community, Engagement

Engagement

Smart Shopper Smart Shopper

Good Value Credibility good Value//Credibility

BRAND For Every Internet User KNOWLEDGE Conv., Variety, Low Conv., Variety, Low Prices Prices For Every Internet User BRAND AWARENESS Books, Music & Videos Books, Music & Videos

Brand Valuation

Cost-based approaches consider the costs associated with creating the brand including research and development of the product concept, market testing, promotion, and product improvement. The accumulated cost approach will determine the value of the brand as the sum of accumulated costs expended on the brand to date. This method is the easiest to perform, as all the data should be readily available. Market-based approaches are based on the amount for which a brand can be sold. The open market valuation is the highest value that a willing buyer and willing seller is prepared to pay for the asset.

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Book to Market

The book-to-market approach is used to estimate the value of a brand by subtracting its book value from its market value. Book value is calculated by adding a companys total assets and subtracting liabilities and intangible assets. Market value is open market valuation Brand valuation using book to Market can be calculated as follows:

bv = m b
Where, bv is brand value m is market value, and b is book value

Gross-profit Differential Method

In this method the value of a branded product is obtained by calculating the difference between the price of that product and the average price of similar non-branded products. It tries to identify the value that is added by the brand to the product. However this is only a measure of the brands strength in the market.

bv = (p n) x
Where, bv is Brand Value p is the avg. price of a branded unit n is the avg. price of similar non-branded product